Carbon Price Drops to Second-Lowest Close After EU Permit Sale Fails

Bloomberg news reports that European Union carbon permits dropped to their second-lowest close ever, after the bloc canceled an auction of permits for the first time as bids failed to reach a secret reserve price.

The sale was called off because the price would have cleared “significantly” below the prevailing market rate, according to European Energy Exchange AG, the unit of Deutsche Boerse AG that runs the auction. EU allowances for delivery in December fell 5.6 percent to close at 3.73 euros ($4.86) a metric ton on London’s ICE Futures Europe, having earlier dropped as much as 6.1 percent. The contract closed as low as 3.42 euros on Jan. 31.

Carbon has plunged almost 90 percent in the past five years as the euro area’s second recession since 2008 cut industrial demand for permits, contributing to an oversupply that EU lawmakers are struggling to fix. Failed auctions may push the cost of emitting carbon dioxide even lower as unsold credits are held over for the next four sales under EU rules.

About Author

Walter’s contributions to CleanTechies over the past 4 years have been instrumental in growing the publications social media channels via his ongoing editorial and data driven strategies. He is the founder and managing director of Sunflower Tax, a renewable energy tax and finance consultancy based in San Diego, California. Active in the San Diego clean technology community, participating in events sponsored by CleanTech San Diego, EcoTopics, and Cleantech Open San Diego, Walter has also been a presenter at numerous California Center for Sustainability (CCSE) programs. He currently serves as an adjunct professor at the University of San Diego School of Law where he teaches a course on energy taxation and policy.